Canadian banks have lowered their fixed mortgage rates to levels not seen in five months.
On Wednesday, Royal Bank of Canada and TD Canada Trust were the first banks to cut their rates. BMO, CIBC and Scotiabank followed on Thursday.
Most terms are falling by a 10th of a percentage point. The posted five-year fixed mortgage rate at those five banks falls to 7.19 per cent. At National Bank, it's 7.15 per cent. That's the lowest posted rate for the popular five-year term since October 2007.
The posted four-year rate at most banks drops 0.15 of a percentage point to 7.04 per cent.
The Bank of Canada has cut its key overnight lending rate by a full percentage point since early December as it tries to keep the Canadian economy from following the U.S. into recession.
That's led to a similar one percentage point drop in variable rate mortgages and other floating rate loans tied to the banks' prime rate.
But fixed mortgage rates have been much slower to drop. Since the start of December, the posted five-year fixed mortgage rate has fallen by just a fifth of a percentage point.
Longer-term mortgage rates reflect the cost that banks pay to borrow money in the capital markets. Analysts say the global credit crunch — triggered by the U.S. subprime mortgage crisis — has made it more expensive for Canadian banks to access funds.
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